adminstrategies that will boost their competitiveness on the global stage.
He was speaking during day one of a two-day strategic management seminar, running under the theme “Change management in a changing economic environment”.
“Zimbabwean organisations need to forget the old ways of doing business. They should develop and implement strategies that boost their competitiveness in the global environment. No one really cares about the years of hyperinflation that the country underwent.
“Foreign investors are very willing to invest in the country, but you should show that your business and macro-economic fundamentals are competitive internationally,” he said.
During the hyperinflationary years, he said Zimbabwean firms generated paper, not real profits because accounting practices did not reflect inflation adequately.
At the same time, in the hyperinflation days, local firms kept ahead by offsetting falling volumes (real turnovers), and by widening margins so that prices rose faster than costs.
The resultant rising profits, although not unhealthy, were both exaggerated by accounting conventions and highly unsustainable.
This unsustainability was evident from the figures for 2009 and 2010 where, for instance, turnover was up 97 percent, with profits rising by 45 percent, although margins went down from 4 percent to 3 percent.
Dr Strickland urged local firms to replace the low-volume, high mark-up business model with a high-volume, competitive mark-up strategy.
“Strategy begins with the fundamental of determining where the firm is, its strength and weaknesses and where it wants to go.
“Because limited resources are a concern everywhere, there is need to define specific organisational strategies and goals, which will result in the efficient use of resources,” he said.
Dr Strickland also said firms should develop sustainable competitive advantages, which means they should constantly review their strategies.
Local companies are facing a number of significant challenges that are negatively impacting on their competitiveness in the region and internationally.
These include the fact that Zimbabwe is a high cost location due to liquidity constraints, the high cost of money and the use of antiquated machinery.
There is also the problem of extensive levels of retrenchments after the hyperinflation years as companies tended to take on too may people at a time when wages were derisory.
However, he said as the country’s economic landscape has changed so should most economic practices.
Dr Strickland currently holds the rank of Professor of Strategic Management in the Graduate School of Business at the University of Alabama.
His experience in consulting and executive development programmes is in the strategic management area with a concentration in industry and competitive analysis.
He has developed strategic planning systems for such firms as American Telephone and Telegraph, Amoco Oil Company, USA Group and General Motors.
Dr Strickland is the author of 15 books and texts and has done extensive work in Europe, the Middle East, Central America, Southeast Asia, Australia and Africa.
Online Reporter